Taiwan Dollar Forwards Fall Most in Three Weeks on Political Row

Sept. 11 (Bloomberg) -- Taiwan dollar forwards fell the
most in three weeks on concern a dispute within the island’s
ruling party will lead to political instability.

The Kuomintang has revoked legislative speaker Wang Jin-pyng’s party membership and seat, according to an official’s
comments on television. President Ma Ying-jeou earlier said Wang
should be expelled for allegedly pressing the Justice Ministry
to drop a case involving an opposition lawmaker. Wang says he
did nothing wrong. The Taiex Index of stocks fell as much as 0.9
percent before erasing its losses to close little changed.

“The political news has led to some unease and many bills
may not be passed as some Kuomintang members may leave the
party,” said Tarsicio Tong, a currency trader at Union Bank of
Taiwan in Taipei. “The central bank will try to maintain
currency stability.”

One-month non-deliverable forwards weakened 0.3 percent,
the most since Aug. 19, to NT$29.695 per U.S. dollar as of 4:27
p.m. in Taipei, according to data compiled by Bloomberg. The
spot rate fell 0.2 percent to NT$29.828, Taipei Forex Inc.
prices show. The currency was trading 0.1 percent stronger nine
minutes before the 4 p.m. close. The central bank has sold the
local dollar in the run-up to the finish on most days since
March 2012, according to traders who asked not to be identified.

One-month implied volatility, a gauge of expected moves in
the exchange rate used to price options, was little changed at
4.18 percent.

The yield on Taiwan’s government bonds due September 2023
was steady at 1.779 percent in when-issued trading, according to
Gretai Securities Market. The notes are due to be officially
auctioned on Sept. 14. The overnight interbank lending rate was
little changed at 0.386 percent, a weighted average compiled by
the Taiwan Interbank Money Center showed.